Unfunded mandates from Washington pose a substantial challenge to both the
budgets and the fiscal sovereignty of the 50 states. This report examines that
challenge and presents data which illustrate the problem for state government in
Michigan. It does not address that other vast arena of federal mandates – those
imposed on private enterprise, from parental leave to plant closing laws –
though in great measure, the critical appraisal presented here would undoubtedly
apply there as well.

A mandate is a command – a requirement that the subject cannot ignore without
penalty. When Congress imposes a mandate upon state governments and does not
provide the resources to carry it out, the mandate is unfunded. State
governments must then raise taxes, reduce other spending, or borrow – in every
event, the mandate preempts and redirects state resources to satisfy the wishes
of Congress.

The use of mandates at the federal level has increased markedly in recent years.
Facing a chronic budget deficit and yet wanting to see new programs of
government enacted or existing ones expanded, Congress has discovered that it
can simply foist programs or policies upon the states and let them worry about
the bills. By one count, there are currently more than 400 federal mandates in a
broad range of policy areas – from health and safety to the environment.

The last two years have produced an explosion in mandates. In the 102nd Congress,
which expired in December 1992, no fewer than 244 bills containing mandates were
proposed. Fortunately, not all of them made their way into law, but by any
measure, this problem is growing worse with each passing year.

Arizona Governor Fife Symington, in his State of the State Address in January
1993, had this to say on the matter: [The State of Arizona] "will continue to
press the case that mandates from the .federal govemment have stripped us of our
fiscal sovereignty ... and have stripped the people of their right to
representative government at the state level."

President Clinton, as Arkansas Governor in February 1991, expressed similar
sentiments when he said, "We need to get a handle on Medicaid mandates or else
some of us are going to go broke."

Congress adopts mandates typically with little or no accurate estimates of their
costs, The Congressional Budget Office, which is charged with calculating such
costs, is hampered by ambiguous language in the mandates themselves, as well as
time constraints that often prevent a thorough analysis. Congress has shown
little concern for the impact of its directives on states and state government
budgets.

Medicaid – the public sector health care program for the poor funded jointly by
federal and state governments – provides a case study of the impact of federal
mandates in Michigan. As part of Medicaid, Congress has imposed a growing list
of unfunded requirements: to provide coverage of nurse-midwife services, to
provide ambulatory services to children and prenatal and delivery services to
pregnant women, and to establish preadmission screening programs for mentally
ill and retarded citizens, to name a few from a lengthy list. Because of these
mandates, state government has fewer resources to devote to matters it might
regard as more pressing.

Among the findings this report reveals in the area of Medicaid mandates alone are
these:

In 1993, $95.3 million – the equivalent of 30 percent of Michigan state
government's revenue growth – will be consumed by the cost of Medicaid mandates.

That $95.3 million figure is larger than the combined General Fund appropriations for five entire state departments: Civil
Rights, Civil Service, State, Attorney General, and Agriculture.

In Michigan, the cost of existing federal Medicaid mandates will grow at an annual
rate of 49.1 percent through 1995, while the General Fund will likely grow at
something close to its historic rate of 5.5 percent.

The problem with unfunded federal mandates goes beyond their burdensome expense to
strike at the very heart of the state-federal relationship. The concept of
federalism, a pillar of the U. S. Constitution, left to the states the lion's
share of government powers and responsibilities. The gradual shift in recent
years toward greater involvement by Washington in nearly all areas of public
policy flouts the federalist spirit and threatens to make vassals of the 50
states. In one area after another, it has produced inferior policy results as
well.

Action is needed to reverse this disturbing habit of the federal legislature.
Among the several recommendations this report makes are these:

A mandate ombudsman – Michigan should create the nation's first official mandate
ombudsman to track, forecast and disseminate information regarding mandates for
the purpose of educating legislators and the general public.

A mandate database – To complement the work of the
ombudsman, the Michigan Department of Management and Budget should create a
computer database that would permit the generation of up-to-date cost estimates.

A state resolution – The Michigan Legislature
should ask our state's federal representatives in Congress to appear annually
before the legislature to explain and justify the mandates Congress is imposing
on the state.

A renewed recognition on the part of all legislators – state and federal – of the
proper roles and interrelationships of state and local governments.

Washington, ultimately, must step up to its responsibilities and kick the
expensive and dangerous habit of foisting mandates upon the states.

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(The authors of Washington Should Kick the Mandate Habit: The Fiscal Impact of
Federal Mandates on Michiganare Michael D. LaFaive, an Adjunct
Scholar with The Mackinac Center for Public Policy, and Lawrence W. Reed,
President of the Center.)